AIG to sell stake in life insurance JV to Tata

After exiting from its IT outsourcing outfit, financially battered American International Group (AIG) is now gearing up to sell its 26% in Tata AIG Life Insurance to its Indian partner.

Tata, which holds 74% in the life insurance joint venture, has roped in consulting & auditing firm KPMG to structure the deal. However, AIG will continue in another joint venture, Tata AIG General Insurance.

According to analysts, the global financial conglomerate will charge Tata a huge premium for its expertise provided to the JV.

Launched in 2001, Mumbai-headquartered Tata AIG Life has built a substantial life insurance operation in India and has some 200 offices across the country and assets of around Rs 10,000 crore. It is yet uncertain whether Tata would run the business itself or divest the 26% from AIG to other foreign partners.

AIG sources pointed out that the company is in the process of restructuring its life insurance business in Asia, which operates under the ambit of American International Assurance (AIA). Earlier, AIG had announced it would accelerate steps to position AIA as an independent entity and seek public listing on an Asian stock exchange, depending on market conditions and subject to regulatory approval.

Public listing is a significant step in a process announced by AIG on March 2 that will result in the creation of a board of directors and management team for the AIA Group separate from AIG. In the Asia- Pacific region, AIA has branch offices, subsidiaries and affiliates in Australia, Brunei, China, Hong Kong, India, Indonesia, Macau, Malaysia, New Zealand, Singapore, South Korea, Thailand and Vietnam.

AIA in the region has more than 20 million customers, 250,000 agents, assets of more than $60 billion and a broad network of distribution partners. AIG has already undertaken similar restructuring of its operations in Taiwan and the Philippines.

With operations in 130 countries, AIG was one of the first victims of the global financial crisis and is now financially supported by the US government. In India, the company has already sold AIG Systems & Solutions, a provider of information technology services and solutions to AIG companies worldwide, to Mphasis.

Flyers to pay more for second check-in bag

Flying is all set to get more expensive with the concept of pay for check-in baggage arrived in India. One of US’ biggest carriers American Airlines has discontinued the earlier practice of allowing economy passengers to check in two bags of up to 23 kg each for no charge. The airline, which flies between Delhi and Chicago, will now charge $50 for the second bag and $150 for the third one, said the airline’s call centre.

Aviation industry insiders say the concept had been prevalent in US and Europe for a while and it was only a matter of time before cash-strapped airlines here too start levying it. "It is a new trend that has come to India. So far only American has told us of this change. Very soon, other airlines, including domestic low cost carriers, could start levying it here too. Nothing will come for free to flyers," said Rajendra Rai, president of the Travel Agents Association of India.

American’s website said: "Customers purchasing economy class tickets on or after September 14 (for travel between) India (some other countries) and US.... may check one bag for no charge and the second bag for $50." The airline’s call centre said the first bag allowed to be checked in for free should weigh up to 23 kg. "If that bag is over 23 kg and below 32 kg, a charge of $50 will be for being overweight. Similarly, if the second or third bags also weigh between 23 and 32 kg then a similar fee of $50 will be levied on each in addition to the additional bag charge of $50 and $150," said the call centre for economy class passengers.

IT majors now in race for lowvalue US state deals

Infosys Technologies, Wipro and HCL Technologies are among the software service providers that are laying foundation for the next round of multi-million dollar orders from the big US corporations, by pitching for low-value but politically important US state governments’ orders. Infosys, which counts JP Morgan and Morgan Stanley as clients for its services, bids for Arizona Public Service’s (APS) 400 positions, who work in its information- services department and another 400 or so contractors to raise the staff strength for undisclosed a m o u n t . Nine other US states, some from where politicians opposed offshoring work, are looking to outsource their healthcare operations worth over $2 billion, said Wipro chief strategy officer KR Lakshminarayana, and the company hopes to get a slice of these.

Many US states such as Missouri, Virginia and Arizona, which are battling falling revenues amid the worst economic slump since the 1930s are attempting to reduce costs and at the same time want to increase employment opportunities for their citizens. So, they are including clauses such as recruitment of minimum number of staff from their states. Indian companies, which were used to contracts of hundreds of million-dollars at one go, are bidding for these low-value orders since their traditional clients are cutting down on technology spending and at the same time provides visibility, which would be helpful in getting big orders when tech spending recovers.

While the global government IT outsourcing market is estimated to be around $100 billion, experts tracking the sector said the US state governments could outsource projects worth up to $5-6 billion this year. States, which in the past opposed the outsourcing of work to Indian companies by the likes of Microsoft and Citigroup, are now turning to the same Indian companies, as their mission now is in line with that of the companies cut costs.

The orders from these state governments are for maintenance of records, accounts, healthcare and other administrative jobs, said a consulting firm engaged with a few governments. Wipro already has a $407-million deal from the state of Missouri for application, maintenance and development (AMD) and BPO work for the state’s healthcare division, which it bagged in December 2007. TCS, Wipro, Infosys and Cognizant are among a few vendors, who have already hired local citizens. TCS has hired 120 people for its centre in Cincinnati.

IBM targets Gujarat SMEs for SMSR, Cognos Express

Even as the small and medium enterprises (SMEs) in Gujarat look to increase their technology adaptability, IBM has forayed with its market specific products in hardware, software and security services, among other things. With an increasing need for data storage and security among SMEs, IBM is expanding its footprint in the state by offering products like Scalable Modular Server Rooms (SMSR) and Cognos Express, apart from other services.

Sharing IBM’s strategic plans for the state, Vanitha Narayanan, vice president - sales, IBM India/South Asia said, "Gujarat plays a very important role in IBM’s strategy for geographic expansion in India. We are extremely excited about extending our partnership to a wide range of clients in the state - both from public and private sector. We are confident of bringing the best of IBM - local as well as global expertise - to clients here, to help them achieve their business goals."

A pre-designed and pre-fabricated data center, SMSR is specifically targeted at mid-market customers that is cost, energy and space efficient. The ready-to-be-assembled data center occupies less than 300 sq ft of area, thereby suiting SMEs’ needs. Similarly, on the business intelligence (BI) side, IBM aims to offer its Cognos Express, a low cost BI and planning solution designed for midsized companies. The company is also enhancing its partnerships in Gujarat by working with NGOs and corporates alike. So far, IBM has partnered with the likes of Gujarat Co-operative Milk Marketing Federation (GCMMF), Atul Limited, Kohler, Indian Institute of Management, Ahmedabad (IIMA), Gujarat Gas and Torrent Pharmaceuticals, among others in the state.

GE plans to source parts from India for F-16 engine

General Electric (GE), which is in contention as the engine supplier for the medium multi-role combat aircraft (MMRCA) contract of the IAF with three of its engines, is keen on sourcing components from Indian industry. GE said, it will manufacture, assemble and test the engine, if any of its partners wins the contract at the Hindustan Aeronautics Limited (HAL). The global engine manufacturing behemoth said it will get many of its engine components manufactured by local firms. GE’s F110-GE-132 turbofan engine powers the F-16 IN, which Lockheed Martin is seeking to sell to India. The F-16 IN is one of the contenders for the MMRCA contract for the supply of 126 aircraft. The F110-GE-132 turbofan engine developed by the GE, and which will power the F-16 IN, was originally developed for the United Arab Emirates F-16E/F. The engine has a thrust of 32,000 pounds, which is considered as little on the higher side for a small aircraft like the F-16. This extra power makes it possible for the F- 16 IN to carry more armaments.

More than 3,000 F110 engines have been ordered since the US Air Force first selected the engine in 1984. Till, now over 3,000 of these engines have been mounted on various airframes including the F14, F15 and F-16, since 1984.

"The firm will tailor the engine for Indian configurations," said Philip G Woniger, program manager, F110-GE-132, GE Aviation. Customizations for the engines that will power the F-16 IN will include durability core.The engine produces 170 reports that guide the engine maintainers.

General Electric to set up wind turbine manufacturing plant in South India General Electric has revealed its plans to set up a wind turbine manufacturing plant in India. The plant will have a capacity to produce 300 turbines (450 MW) annually. "The plan is, over a period of time, to make the whole thing indigenously. Initially, what we are doing right now is working with potential supply chain partners to see who can actually make some of these products in India," Mr. Tejpreet S. Chopra, President and Chief Executive Officer of GE India, said.

He said that they had not decided on the size of investment and were yet to zero in on a location for the plant. The plant is expected to come up in South India and begin operations by the middle of next year.

With this facility, GE Energy will be able to have a larger sourcing base from India for critical items, including - blades, towers, gearboxes, castings and forgings. The plant will begin by producing the 1.5 XLE turbine, which is suited for low-wind conditions. Turbines from India will be shipped to other markets in the world, as the capacity of the plant is gradually ramped up.

"I think what’s very encouraging is the fact that the government’s moving from the tax-incentive/taxdepreciation methodology of providing incentives to more generation based incentive program," he said.

India signs civil nuclear deal with Mongolia

India and Mongolia signed a crucial civil nuclear agreement for supply of uranium to New Delhi, making the country number fifth in the world to seal a civil nuclear pact.

The government, apart from announcing a soft loan of $25 million to rejuvenate the economy of the resource-rich Central Asian country, also signed four more agreements talks between Prime Minister Manmohan Singh and Mongolian President Tsakhia Elbegdorj.

The MoU on "development of cooperation in the field of peaceful uses of radioactive minerals and nuclear energy" was signed by senior officials in the department of atomic energy of the two countries.

Volkswagen Polo to drive in with petrol and diesel options

The Volkswagen Polo, scheduled to be launched in India early next year, will be one of the most awaited small cars in recent times. While there is much speculation about the hatch that VW hopes will it help rake in some volumes and a bigger presence in the Indian market, there is finally some information about how this premium small car will finally look like.

The India-spec Polo is likely to be offered with two petrol engines and one diesel engine right from when it is launched in early 2010. Further, in addition to the manual transmission, the Polo will also come with an automatic transmission option. The premium hatch has already been through an advanced level of testing and currently pre-series production is on. Start of commercial production is set for the early next year.

Revealing some of these details, Dr Jochem Heizmann, Member of the Board responsible for production, VW Group, said that the German automotive conglomerate is also working on a notch car that will be based on the Polo. The all-new notch based on the Polo will be developed and manufactured exclusively for the Indian market. It will be longer, wider and offer more legroom than the Polo and may also carry a different name tag. Being specially designed for the Indian market, the notch car will be tuned to offer better ride quality and comfort for rear passengers. Volkswagen is in the process of finalizing the selection of the powertrains for the India-spec Polo and the choice is likely to be influenced by the costs of the technologies that the engines will feature and the strategy of the competitors in the premium hatch segment, Dr Heizmann said.

Volkswagen is targeting a components localization level of about 50 per cent right from the start of production of the Polo. The company’s plant at Chakan, near Pune, when at full production, will have a capacity to produce about 1.1 lakh cars annually. With the scheduled new vehicle launches, Volkswagen has set itself a roadmap of four to six years for reaching targeted full capacity utilization of the plant.

The company is also hoping to corner a market share of about 8 to 10 per cent during the time period. As for its India product strategy, VW is expecting to straddle the whole spectrum of passenger vehicles starting from affordable small cars to niche cars and imports.

India to turn world’s third largest steel producer this year

Going by the production of steel in the country so far this year, India is on its way to becoming the third largest steel producer in the world. With an output of 55 million tonne (mt) last year, the country was ranked fifth in the world after China (501 mt), Japan (119 mt), United States (91 mt) and Russia (69 mt). Germany, Ukraine and Brazil followed India at the sixth, seventh and eighth positions, respectively.

India, which had earlier set itself the target of becoming the world’s third largest steel producer by 2013, is also aiming to produce 124 mt of steel by 2011-12. Speaking to FE, Joint Plant Committee (JPC) executive secretary Goutam Kumar Basak said that going by the production figures for April-August 2009, which saw a production of 22.14 million tonne of steel (a jump of 6.6% over the corresponding figure for 2008), the country India is likely to emerge as the third largest producer of steel in the current year itself.

Basak, while attending an awareness program on energy efficient technologies & pollution abatement measures for the secondary steel sector, said steel production in the country has always risen considerably in the second half of the year, as demand for steel picks up from around October. This, he said, was mainly because construction activity in the country picks up significantly after the monsoon.

Ingersoll Rand to invest $100 m in India over 3 years

The $13-billion Ingersoll Rand plc has earmarked about $100 million investment in its Indian operations during the next three years and expects to source products and services of an equal amount.

"We want to double the size of the company in three years," the Ingersoll Rand Chairman and Chief Executive Officer, Herbert L. Henkel, told.

He said the diversified industrial group wants to more than double its sales to about $500 million in three years in India. He said Ingersoll Rand spent the last 100 years building roads and infrastructure and for the next 100 years wants to focus on making products concerning "safety, comfort and efficiency."

The Indian operations of Ingersoll Rand employ about 1,600 people and have offices in 18 locations, which include two manufacturing plants. "We could add more people and more locations depending on how our business expands," he said. Of the 1,600 employees, Ingersoll Rand has 450 engineers who work out of Chennai and Bangalore engineering centres.

These engineers work on product innovations for the global operations of the company. Mr Henkel said India would soon become a major manufacturing hub, which would necessitate better efficiencies. "We have solutions that provide efficiencies at all levels, apart from huge savings," he said.

The company’s security solutions for both individual homes as well as business establishments could lead to huge savings in electrical costs as well as ensure better security. The current size of the security solutions market in India is about $1 billion, Mr Henkel said.

The Ingersoll Rand International (India) President, Mr Venkatesh Valluri, said the company was in talks with the Government on providing security solutions for the unique identification number project, headed by former Infosys co-chairman, Mr Nandan Nilekani.

HPCL to supply LPG to US-based co Plug Power for 5 yrs

Hindustan Petroleum Corp Ltd (HPCL) has entered into an agreement to supply LPG to US-based fuel cell manufacturer Plug Power.

"Under the five-year contract, HPCL will supply commercial liquefied petroleum gas (LPG) to Plug Power’s GenSys fuel cell systems powering remote cell towers in rural India," the company said in a statement. Plug Power Energy India Pvt Ltd, a unit of Nasdaq-listed Plug Power Inc, had bagged an order from WTTIL — the cell tower arm of Tata Teleservices Ltd — for 200 GenSys systems to be installed at TTSL cell tower sites by March 2010. The company expects to install around 1,000 systems by end 2010. "HPCL will be providing LPG fuel for the initial 200 installations," it said. GenSys provides continuous power to cell tower sites with no or extremely unreliable electric grid service.

About 10 per cent of the cell towers in India currently operate completely off-grid where the primary power is provided by diesel generators. "HPCL is evaluating the utilization of GenSys prime power systems within its own infrastructure, including petrol pumps, community kitchens, pipelines and other potential applications," the statement said.

HPCL Chairman and Managing Director Arun Balakrishnan said the agreement was a step towards providing clean and reliable energy solutions to customers. HPCL has an extensive pan-India infrastructure, delivering 5,80,000 cylinders of LPG on a daily basis. HPCL is also currently evaluating the utilization of GenSys prime power systems within its own infrastructure including gasoline fueling stations, community kitchens, pipelines and other potential applications.

HPCL’s Chairman and Managing Director, Arun Balakrishnan, said, "this agreement is a giant step towards providing clean and reliable energy solutions to our customers through technological advancements. This synergy with Plug Power Energy India would also go a long way in propagating the use of efficient and cleaner fuel to reduce effect of climate changes."

"HPCL has been a great partner to date, supporting our early trial and demonstration activities with the on-time delivery of LPG gas," Plug Powers vicepresident for Continuous Power, Mark Sperry, said.

[ BY LAVANYA GARIKINA ]